Market sources informed SSESSMENTS.COM that LPG consumption in China is continuing to recover after the coronavirus outbreak forced it to fall to 70%-80% of volumes after the Lunar New Year Holiday. LPG demand in April has reached 80%-90% of the levels recorded in the same month last year following lockdowns ease across the country.
LPG imports totalled 3.8 million tons in Q1 2020, about 83% of import volumes in Q1 2019. In April, imports reached 1.5 million tons, 100,000 tons higher than imports in April last year. Data from state-owned energy company Sinopec showed that China consumed 48 million tons of LPG last year, with the petrochemical sector contributing to 24.4 million tons, while residential and commercial consumers used 22.8 million tons.
Chinese producers added around 1.05 million tons/year of propane dehydrogenation (PDH) capacity in Q2 to Q4 2019. However, LPG imports by PDH plants were stagnant at 1.67 million tons in Q1 2020 as many of them were idle or operated at reduced rates due to the coronavirus outbreak. As SSESSMENTS.COM noted, PDH operation rates dropped from 84% in January to around 67% in mid-March.
However, LPG demand from these plants are expected to increase in the coming months, driven by start-ups of new units as well as surging prices and demand for PP fibre used to produce face masks. In the first week of April PDH operating rates in China rose to 97%, in line with the resumption of the country’s economic activity. In April, LPG imports by PDH plants rose by 15% year-on-year, or by 23% from monthly average in Q1 to about 685,000 tons.
The PDH units that are expected to start up soon include Huahong New Material’s 450,000 tons/year unit in mid-May, ZPC’s 600,000 tons/year unit at the end of May, and Fujian Meide’s 660,000 tons/year plant by June. However, market sources informed SSESSMENTS.COM that some PDH units are currently shut due to unplanned shutdowns. Wanhua Chemical put its 750,000 tons/year unit offline on April 13 due to mechanical issues and expected to remain shut for 2 weeks. Meanwhile, Tianjin Bohua began an unplanned shutdown at its 600,000 tons/year unit earlier this month and it remains unclear when the company will restart it.
